Comparison of the Health Care Financing Administration's Medicare Bureau Claims Processing Costs for 1973 and Fiscal Year 1975

HRD-77-139: Published: Dec 22, 1977. Publicly Released: Dec 22, 1977.

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A comparison was made of government costs for processing Medicare bills for fiscal years (FY) 1973 and 1975.

The average costs per bill processed by the Division of Direct Reimbursement decreased by about 35 percent since 1973; they were reduced from $12.39 in 1973 to $7.27 in FY 1975. The decrease was primarily caused by: (1) a change in the relative mix of the different types of bills processed; (2) a large increase in bill volume; and (3) improvements in the Division's bill-processing system which resulted in reduced processing times. The total savings exceeded the difference between the 1973 unit cost and the FY 1975 unit cost because salaries and other costs rose during that period. With one exception, the cost per bill processed of the private intermediaries was also reduced although generally to a lesser extent than the Division's reductions. In response to recommendations in a prior report, the Medicare Bureau has taken actions to: report cost data for its intermediary-type function, evaluate the performance of its intermediary function, and develop a methodology to help evaluate intermediaries' performance.

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